#3 Loan Trends Driven by Lending Platforms that are Gaining Popularity!
By assessing a person's credit worthiness, online platforms allow borrowers to fulfil their loan requirements swiftly
Financial services have changed over the years. You can check your account balance on your smartphone, make bank transfers at one touch of a button, and deposit cash at automated deposit machines. The memories of long queues at the cashier and use of deposit slip for fund deposit seems to belong to another era altogether. With new-age, technology-driven lending platforms stepping into the picture, the velocity of this change has become more rapid. So, let’s have a look at three trends led by online lending platforms, which are becoming increasingly popular:
Quick Loan Verification: Loans were once believed to be a luxury, only available to a handful of people with good connections with bankers. It would generally take about three months for the entire loan verification process to complete for an average person, because of collateral demands, red-tapism, endless documentation, pending approvals, and additional verifications — at the end of which there was often rejection. Even if approved, the time it took for the amount to be processed would often make the need for the loan by and large redundant. This dynamic has been significantly changed by the rise of innovation-driven lending platforms. By precisely assessing a person’s credit worthiness within 24 to 72 hours, these online platforms allow borrowers to fulfil their loan requirements swiftly and withminimal documentation.
Distinct Customer-centric Loan Products: Traditional lending institutions generally offer limited variation in loan products to its customers; however, the credit requirements generally vary from one user to other.Traditional lending institution generally includes home, vehicle, personal, education and agricultural loans. A borrower might require a loan for very specific needs such as marriage, making rental deposit, or booking a long-awaited holiday. Digital lending platforms, with their innovative approach, have specifically innovated loan products to meet these unconventional requirements and increase the comfort and convenience for the loan seeker. They are also extending EMI-free loans and advance salary loans, as well as apreapproved line of credit which the customer can use as per their wish.
Collateral-free Loans: Earlier, one of the basic requirements to avail a loan was to have a collateral ready with you. This could have been anything from home, shop, vehicle and gold to any other kind of listed asset. The availability of collateral ensured an easy and swift approval of the loan, while its unavailability prevented a creditworthy applicant access to funds at thetime of need.
A loan was instantly assumed to be a collateral-based loan, but this was only before the advent of lending platforms in India. Such technology-based platforms use proprietary algorithms, which processes data in real time and judge each and every applicant based on reliable parameters. This not only takes minimal time, but also generates precise results, which ensure the creditworthiness of the loan applicant. Above everything else, these trustworthy systems eliminate the need for collateral to secure credit and make it accessible when one needs it.
The rise of tech-based online lending platforms has been a boon for the country. As they continue to transform the lending market in India, only time will tell what new disruption comes out next from their bag of tricks.
Satyam Kumar is the Director and Head of Product and Risk & Credit at LoanTap, a fintech platform delivering flexible loan products to salaried professionals. Satyam enjoys a healthy rapport with senior & top management in banking and real estate firms and has a strong following among middle management professionals across banks, HFCs and NBFCs.